Access to Philanthropic and Commercial Income Among Nonprofit Community Service Organisations

Governments depend on nonprofit, voluntary sector organisations to deliver social and community services, and public funding is the sector’s most important income source. However, in many countries, public funding for social services is becoming more limited, conditional and precarious, and governments are encouraging nonprofits to diversify their funding base, and shift their reliance to income from market activity and private donations. This article is concerned with access to philanthropic and commercial funding among nonprofits, and the factors affecting it. It firstly discusses an emerging policy agenda to promote private funding among nonprofit community service providers. Then, multivariate analysis of survey data from 521 Australian nonprofits shows which organisations access income from client fees, business activities, community fundraising, and philanthropic foundations. By exploring inequalities in the distribution of these main sources of private funding, the article helps identify the types of organisations that face challenges in establishing and sustaining streams of private income, and which are likely to require ongoing public support.     

Which Nonprofit Gets More Government Funding?

Government represents one of the most important funding sources for nonprofit organizations. However, the literature has not yet provided a systematic understanding of nonprofits’ organizational factors that are associated with their receipts of government funding. This study combines interorganizational relationships and organizational institutionalism literature to examine the determinants of nonprofits’ obtainment of government funding. Based on a survey of human service nonprofits in Maryland, this research finds that nonprofits with higher bureaucratic orientation, stronger domain consensus with government, and longer government funding history are more likely to receive government contracts and grants. Nonprofits’ revenue diversification, professionalization, and board co‐optation might have very limited impacts.     

Small,minority‐based nonprofits in the information age

Pundits of information technology stress that the Internet opens new arenas for nonprofits through the ability to share information both locally and globally. New technology also changes funders' and other evaluators' expectations regarding proposals. Although new technology makes life easier for organizations with budgets, time, and familiarity with technology to buy and use these new tools, nonprofits that lack these resources fall even further behind in their quest to support and improve their programs. Based on ethnographic research in Kenosha, Wisconsin, this article explores the role of changing technology in the ability of small nonprofits to succeed in implementing their organizational mission. Using case studies, this article compares the experience of nonprofits and church mission projects based in the African American and Latino communities in this small city to that of two mainstream organizations in gaining funding and the general perception of those agencies in the local community. The article argues that expectations about the use of technology increase the gaps between a community's haves and have‐nots. Kenosha organizations based in communities of color are particularly at risk due to already low funding and lack of staff familiar with new technologies. The article demonstrates that the key is often not access to technology or technical assistance but the time to make the best use of available technology.     

Dynamics between fragmentation and unity: Identity and nonprofit relationship management in the Asian American Community

Focusing on community-based nonprofits with specific missions of serving the Asian American community, this study examined the dynamics between various layers of identity, including ethnicity and panethnicity, and identified how intercultural relationship management contributed to a sense of community and empowerment among minority communities. Interviews from both nonprofit community organizations and community members revealed the following major findings. First, Asian American community nonprofits needed to manage a myriad of identities within their community, particularly the interplay between diverse ethnic identities and the pan-Asian ethnic identity. To help manage these identities, these nonprofits adopted a dual approach using both segmented outreach and coherent advocacy. Second, these community nonprofits used intercultural relationship management to build a sense of community and efficacy, promoting outcomes such as health awareness, communicative activeness, cultural shift, political engagement, and community alliances. This study contributes to relationship management literature through introducing identity-based relationship building strategies.     

The crowding‐out effect within government funding: Implications for within‐source diversification

The benefits and risks of revenue diversification lead scholars to propose within‐source diversification as a possible compromise. Although this revenue strategy sounds promising, no scholarly attention has been devoted to empirically examining it. This study explores within‐source diversification across government funding, specifically whether nonprofit receipt of support from a major government funder affects support from other government funders. Using a panel dataset of U.S.‐based international development nonprofits from 1995 to 2014, we find that nonprofits with more funding from the major funder are associated with significantly less funding from other funders. This crowding‐out effect weakens as organization size grows. The findings imply that the within‐source diversification strategy might be more desirable for larger organizations with the capacity to manage multiple funding relationships.     

The double-edged sword of social service contracting: public accountability versus nonprofit autonomy

The increased role of government contracts in the funding of nonprofits has heightened tensions as governments seek accountability and nonprofits seek to preserve autonomy. Considering both sides of the contract market this article suggests that the threat of government funding is exaggerated. Nonprofits are attractive contractor options because of their experience and trustworthiness. Governments should recognize that excessive intrusions limit the advantages of the nonprofit sector. At the same time, nonprofits should be conscious of the implications of public funding, just as they must be of other sources of funding.     

How organizational characteristics affect the adaptive tactics used by human service nonprofit managers confronting financial uncertainty

The way that nonprofits respond to funding uncertainty is crucial to their ability to meet goals and position themselves for future success. This article investigates how structural, managerial, and financial characteristics affect the adaptive tactics used by human service nonprofits during times of financial stress. These tactics include adding new programs, reducing programs or staff, expanding or starting joint programs, pursuing earned income, and expanding advocacy involvement. Using longitudinal data on human service nonprofits collected on either side of the 2002–2003 economic downtown, we find that larger size provides organizations with a unique ability to choose among different adaptive tactics, as larger size was significantly predictive of adding new programs, reducing programs, expanding advocacy, and pursuing earned income. Strategic planning was positively associated with innovative tactics such as starting joint programs or pursuing earned income. Financial stress or declines in an organization's major funding source led to cutbacks, as expected, but managers who foresaw these challenges were able to respond proactively by adding programs or starting joint programs. However, managers with more training did not respond much differently than did other managers, and organizational age and use of performance management tools had no effect in guiding organizational responses to financial uncertainty.     

Creating positive change in community organizations: A case for rediscovering Lewin

As nonprofits, especially those with a community mission, pursue developmental goals, they may benefit from various planning and analytical tools. This article explores an application of Kurt Lewin's planned change model to an assessment and revisioning process undertaken by a community‐based organization, indicating the ongoing usefulness of Lewin's work in the nonprofit sector. Using a case study approach, we examined the actions embarked on by the organization to address decreased funding and client losses. The Lewin model is overlaid to illustrate its value in structuring organizational decision making and development. The model is a three‐step process of unfreezing from old practices, moving and changing the organization into new directions based on formally identified needs, and refreezing into more effective organizational modes. When combined with other standard practices such as strategic planning, Lewin's model provides a practical and theoretically insightful tool for nonprofits wishing to refine their missions and programs and engage in successful organizational change.     

“To be a business and to keep our humanity”

In recent years, the political nature of nonprofit funding has been well established, with research focusing on increased demands for accountability (Eikenberry and Kluver, 2004), difficulties in selecting accountability measures (Reed, Jones, and Irvine, 2005), and the shift from organizational mission that can occur while trying to adhere to funding requirements (Adcroft and Willis, 2005; Parsons and Broadbridge, 2004). This article examines the dynamics between a funder and the nonprofit organizations it funds within an evolving accountability process. Specifically, we use qualitative methods to examine the negotiations between the funder and the nonprofits. Both sides in the funding relationship face tensions as they attempt to work within the constraints of this specific funding regime while trying to maintain their focus on social justice outcomes.     

Using Social Network Analysis to Enhance Nonprofit Organizational Research Capacity: A Case Study

As donor agencies become more specific in funding requirements, research that can demonstrate the collaborative efforts of a nonprofit agency with its organizational neighbors and how those efforts pay off in terms of capacity and provision of services is highly useful. Recognizing these benefits, a local funding agency in Virginia commissioned a study to look at the ways in which social network analysis (SNA) can enhance the data resources available to nonprofits for funding and grant requests. In this article, we present a case study of a network of 52 nonprofit organizations to illustrate the viability of SNA in terms of funding and research needs specific to nonprofit organizations. We discuss the outcomes of the case study in terms of how the visual and metric outputs of SNA can be used by nonprofits to enhance the accomplishment of their organizational missions and strengthen their grant requests.     

Nonprofit cash holdings and spending: The missing role of government funding

Charitable nonprofit organizations have long been under scrutiny with regard to how they manage excess funds, particularly cash holdings. Given previous empirical evidence, agency problems have been treated as an effective lens to explain the consequences of cash holdings among nonprofits. That is, nonprofit managers spend cash holdings for their own interests as opposed to the social interests of the organization. This study revisits the question of how charities manage extra cash and further examines the role of government funding in nonprofits' spending decisions. The results suggest that nonprofit managers make decisions on how to manage extra cash in accordance with the level of cash holdings; therefore, agency problems do not effectively explain how nonprofits manage extra cash. Furthermore, the results illustrate two contrasting roles of government funding in nonprofits' financial behavior: government funding may be used to monitor unscrupulous behaviors among managers, but it may also restrain nonprofits from investing in human capital.     

The Impact of Economic Crises on NGOs: The Case of Greece

The paper analyzes the impact of economic crises on organized civil society. A number of empirical studies have shown that a financial crisis can inflict a serious damage on the nonprofit sector—mainly through a sharp decline in revenues. However, the Greek case shows that a crisis can also have some positive effects on NGOs: many nonprofits introduced reforms that increased efficiency, the number of volunteers reached record levels, and there was a spectacular rise in funding by private philanthropic foundations. However, Greek NGOs continue to be dependent on external funding, unable to raise large sums from their members and the wider public. Organized Greek civil society continues to be turned upside down: dependency on EU and state funds is being replaced by dependency on private foundations.     

Environmental Nonprofit Campaigns and State Competition: Influences on Climate Policy in California

Over the past 20 years, the US Federal Government has been considered to be intransigent in its response to climate change by many commentators and not-for-profit environmental advocacy organizations (nonprofits). An enduring source of pressure on the US Government has been nonprofit campaigns operating at both a state and federal level. Six US environmental nonprofits representing a diversity of resources and prominence were selected for an in-depth examination of their climate-focused campaigns. Given the resistance at the federal level, these nonprofits have undertaken state-focused campaigns to achieve adequate climate policy development. This research examined some climate campaigns in California by the selected nonprofits that have supported, enhanced, and influenced the Californian Government’s efforts to address climate change. The campaigns have gained leverage from existing state competition for economic advancement and political leadership on issues of public concern. In addition, they appear to have benefited from a high level of environmental awareness in the community, a history of progressive environmental legislation, Governor Schwarzenegger’s use of climate change to differentiate his political leadership, and strong public trust of nonprofits. Recent climate-related political pledges and legislative changes at a federal level are convergent with the nonprofit-influenced, state-level developments.     

Latino Faces,Corporate Ties: Latino Advocacy Organizations and Their Board Membership

Although they have increased exponentially since the 1960s, social scientists know little about ethnic advocacy organizations. These nonprofits are important bridges between underresourced communities and mainstream funding organizations and their directors are established ethnic leaders. Sociologists study interlocking directorates—or shared board membership—to understand how organizations fit together within broader social networks. Network concepts, particularly the theory of institutional isomorphism, suggest that organizations are likely to be similar to the extent they are connected and operate within a common organizational field. We apply this logic to Latino advocacy organizations to examine the underlying source of cohesion across this ethnic field. We ask whether the organizations are tied by interlocking directorates of ethnic elites who sit on their boards of directors or if board members' common affiliation with other elite institutions creates the structural conditions that facilitate potential ideological or behavioral similarity. A social network analysis of five prominent Latino advocacy organizations reveals support for both hypotheses: Latino board members are both embedded in ethnic‐based networks and entrenched within elite organizational webs. This suggests that ethnic elites who sit on the boards of Latino advocacy organizations are also corporate elites, selected for the social capital they bring to these nonprofits.     

The more you know,the more you give: Influence of online disclosure on European community foundations' donations

Competition is high in the charitable contributions market, and donors demand to know how nonprofit organizations use the money they receive. In scrutinizing the variables that affect the capacity of nonprofits to attract donations, previous research has highlighted the positive influence of the amount of financial and performance information that nonprofits disclose through their websites. This study explored whether the depth of the organizations' online disclosures also affects these donations. In line with existing studies on regression‐based economic models of giving, this study considered community foundations—focusing on the United Kingdom and Italy—and its results indicated that managing the depth of the information provided through financial reports can influence donors' sensitivity and willingness to donate.     

Resource Constraints or Cultural Conformity? Nonprofit Relationships with Businesses

Nonprofit interactions with businesses have become increasingly diverse, but which nonprofits establish relationships, and to what extent do relationships depend on the form or type of tie? Focusing on nonprofit collaboration with businesses and donations from businesses, we test arguments based on sociological institutionalism and resource dependence theory. We find that nonprofits relying on earned income, nonprofits led by individuals with management degrees, and rationalized nonprofits all are more likely to report collaborations with businesses, aligning with expectations from institutional theory. For donative ties between businesses and nonprofits, we find that rationalized nonprofits are more likely to have charitable gifts from businesses. However, nonprofits with earned income are less likely to have business donations, and funding diversity has a salient positive effect. These results reveal important but paradoxical institutional and resource dependence effects. We conclude with a discussion of our divergent findings and set an agenda for additional research on the topic.     

The DIRECTIONS nonprofit resource assessment model: A tool for small nonprofit organizations

Rapid growth in the number of nonprofits has created a shortage of trained staff and experienced volunteer leadership for nonprofit organizations. The Nonprofit Education Initiative (NEI) in South Carolina developed the DIRECTIONS nonprofit resource assessment model to provide tools to help nonprofits better meet the challenges facing our communities—tools that will help nonprofits develop effective plans, integrate resources, diversify revenue, communicate effective messages, and motivate constituents. These tools are also inexpensive and available close to home. The research and development process was a cooperative effort between the Department of Parks, Recreation, and Tourism Management and Clemson University Cooperative Extension Service, with funding from the W. K. Kellogg Foundation. Cooperative Extension is a component of the land grant university system, the largest educational delivery system in the world. Cooperative Extension's role is to plan, execute, deliver, and evaluate learning programs consistent with locally identified needs. It helps people acquire the understanding, capabilities, attitudes, and skills essential to solving farm, home, and community problems. This article gives a background of the challenges facing nonprofit organizations in South Carolina, the steps taken to develop this new assessment model, and results of research conducted throughout the development process.     

Does meeting standards affect charitable giving? An empirical study of New York metropolitan area charities

Charitable donations constitute a significant revenue source for many nonprofit organizations. To help donors decide which nonprofits to support, watchdog organizations such as the Better Business Bureau (BBB) Wise Giving Alliance have developed standards to promote wise giving. The effectiveness of these guides in channeling limited resources to the best‐managed nonprofits is not widely studied. This research attempts to empirically investigate the effects of standards on public giving, controlling for factors that have documented effects on donations. Specifically, it regresses public support on the extent to which local nonprofits meet the standards of the Better Business Bureau Serving Metropolitan New York, Mid‐Hudson and Long Island Regions, controlling for organization size, board size, service category, government funding, fundraising expense, and giving price. The study found that BBB standards have a positive effect on giving behavior. Meeting BBB standards is associated with higher levels of public support. Participating in assessment programs and striving to meet the standards are recommended for nonprofits seeking to improve funding through charitable contributions. Further study that extends the search for the mechanism that links meeting standards to improved donations is recommended.     

What Affects the Strategic Priority of Fundraising? A Longitudinal Study of Art,Culture and Humanity Organizations’ Fundraising Expenses in the USA

Fundraising is a crucial activity for many nonprofit organizations. However, scant research has examined how the strategic priority of fundraising activities may vary across organizations and over time. This study addresses this gap in knowledge by examining how economic and organization-specific financial conditions predict the priority of fundraising in a nonprofit organization. In particular, this study examines the changes in the ratio of art, culture and humanities organizations’ fundraising expenses to their total expenditure during the period of 2005–2012, which includes the great recession of 2007–2009. The findings reveal that, when facing an economic crisis, the ratio of fundraising expense to total expenditure increases, suggesting that fundraising becomes a higher priority under a hostile economic condition. The analysis also reveals differences in nonprofits’ reaction to recession depending on their revenue mix, with donative nonprofits reacting more sensitively than commercial nonprofits.